Businesses & Financial News

Foreign firms decry high taxation

By Monica Muema

Businesses are decrying the high cost of doing business in the country, amidst the economic challenges brought about by the COVID-19 pandemic and the ingoing Russian invasion of Ukraine.

Those concerns are being raised at this year’s BUILDEXPO Kenya 2022 at the Kenyatta International Convention Conference (KICC) with high taxes and corrupt county officials that are said to be stifling foreign companies’ effort to operate locally.

“It is not fair, yes there are other global economic shocks such as Covid-19, but high taxes extended to companies such as ours, is making our existence here a toll order.

If the government can sort that out, then I think we can capitalize on the opportunities in the build and construction sector,” commented Harbin Zhao, the managing director of Lidden International, a machinery manufacturing firm showcasing at KICC.

The Expo is being held this year after the idea was halted last year due to the pandemic.

Equally Mr Zhao expressed concern on the current focus on politics without practical solutions to bring local businesses back on the recovery track who called on the government to do away with archaic regulations, which hinder business growth.

“We are seeing a lot of opportunities at the Counties Governments and unless these fears and concerns are addressed, expansion in those regions will be a challenge,” said Zhao, who also expressed distress over rising cases of counterfeit spare parts.

Kenya’s services sector shrank in April on rising consumer inflation and the general living costs, a private-sector survey shows.

For the first time in three months, S&P Global Kenya Purchasing Managers’ Index (PMI) dropped to 49.5 from 50.5 a month earlier, in the latest sign of a mounting economic ding-dong.

The 50.0 mark separates growth in activity from contractions and readings below 50 show a deterioration.

Released last Friday, the survey further shows that business conditions by Kenyan companies deteriorated in the month under review, as firms experienced supply shortfalls for a number of items and a near-record rise in input prices.

“The decline in operating conditions was underlined by a renewed fall in new order volumes in April.

The decrease was often related to clients reducing their spending due to marked increases in selling prices, fuel costs and other living expenses,” noted the report in its analysis.

Overall the survey panelist, found that wage costs at Kenyan businesses rose for a second consecutive month during the month, with the rate of inflation picking up to the highest since June 2021 even though it remained marginal.

Indeed, consumer inflation jumped to a six-month high of 6.5 percent in the period under review, up from 5.6 percent in March.

The survey noted that Kenyan businesses raised their workforce numbers again during the month, with the rate of hiring accelerating slightly compared to the previous month.

However, it remained modest and slower, which according to latest findings show rising workloads in a bid to reduce backlogs, underpinned by job creation in April.

Additionally, job numbers rose in four of the five broad sectors covered by the survey, with construction in particular the only area to record a decrease.

And while there were some reports of firms increasing salaries in line with higher living costs, the vast majority of respondents saw no change in their labor expenses.

Kenyan companies were also able to maintain a stable level of incomplete work at the start of the second quarter of the year, after signaling increases in each of the previous two months, according to panel members, who noted that lower intakes of new work and increased staffing led to spare capacity, even though this was offset by delays in the delivery of goods.

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